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News

Saudi Arabia Plans $2 Trillion Megafund for Post-Oil Era: Deputy Crown Prince

By on 1 Apr 2016 in news, notable posts with 0 Comments
Saudi Arabia Plans $2 Trillion Megafund for Post-Oil Era: Deputy Crown Prince

(Bloomberg) Saudi Arabia is getting ready for the twilight of the oil age by creating the world’s largest sovereign wealth fund for the kingdom’s most prized assets.

Over a five-hour conversation, Deputy Crown Prince Mohammed bin Salman laid out his vision for the Public Investment Fund, which will eventually control more than $2 trillion and help wean the kingdom off oil. As part of that strategy, the prince said Saudi will sell shares in Aramco’s parent company and transform the oil giant into an industrial conglomerate.

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Saudi Arabia will only freeze oil production if Iran joins plan

By on 1 Apr 2016 in news, notable posts with 0 Comments

(Bloomberg via WorldOil.com) RIYADH — Saudi Arabia will only freeze its oil output if Iran and other major producers do so, the kingdom’s deputy crown prince said, challenging the country’s main regional rival to take an active role in stabilizing the over-supplied global crude market.

The warning by Mohammed bin Salman, 30, who’s emerged as Saudi Arabia’s leading political force, leaves the outcome of a meeting between OPEC and other big oil producers this month in question. Iran has already said it plans to boost its production after the lifting of sanctions following a deal to curb the country’s nuclear program.

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As U.S. shale drillers suffer, even the bankrupt keep pumping oil

By on 1 Apr 2016 in news, notable posts with 1 Comment
As U.S. shale drillers suffer, even the bankrupt keep pumping oil

(Reuters) A pump jack stands idle in Dewitt County, Texas January 13, 2016. As oil prices nosedived by two-thirds since 2014, a belief took hold in global energy markets that for prices to recover, many U.S. shale producers would first have to falter to allow markets to rebalance.

With U.S. oil prices now trading below $40 a barrel, the corporate casualties are already mounting. More than 50 North American oil and gas producers have entered bankruptcy since early 2015, according to a Reuters review of regulatory filings and other data. While those firms account for only about 1 percent of U.S. output, based on the analysis, that count is expected to rise.

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Analysis

US Shale Oil Production Costs Fell by 30% from Decade High

By on 30 Mar 2016 in analysis, notable posts with 0 Comments
US Shale Oil Production Costs Fell by 30% from Decade High

(EconomicCalendar.com) Costs associated with shale oil exploration and production decreased by a third in 2015 thanks to implementation of more effective technologies. Experts are certain that this could affect crude oil prices in the short term.

Costs beared by US shale producers shrunk by 25-30% last year in comparison to their decade high in 2012. This is attributed to the usage of advanced technology that improved the effectiveness of both well drilling and post-drilling well development, according to research conducted by the energy industry consultant IHS Global Inc. and commissioned by the Energy Information Administration (EIA).

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Why rigs deactivation doesn’t matter much?

By on 28 Mar 2016 in analysis, notable posts with 2 Comments
Why rigs deactivation doesn’t matter much?

(Econotimes) According to latest numbers from Baker Hughes, number of active oil rigs operating in United States has dropped to lowest levels since 2008/09 financial crisis. While back in October, 2014, the number of active rigs were at 1609 but as of last week it declined further by 15 rigs to 372, lowest since November, 2009.

In recent times, some market participants have taken note of the rig count to increase bullish bets on oil price recovery, suggesting drop in number of rigs indicating further declining in investments. However, our analysis suggests, when it comes to oil price recovery by changing fundamentals, other than intraday or few days boost, rigs count doesn’t matter much.

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IMF: Oil Prices And The Global Economy – It’s Complicated

By on 24 Mar 2016 in analysis, notable posts with 0 Comments
IMF: Oil Prices And The Global Economy – It’s Complicated

(Seeking Alpha) By Maurice Obstfeld, economic counsellor and director of research at the International Monetary Fund; Gian Maria Milesi-Ferretti, deputy director in the Research Department of the International Monetary Fund; and Rabah Arezki, chief of the Commodities Unit in the IMF Research Department

Oil prices have been persistently low for well over a year and a half now, but as the April 2016 World Economic Outlook will document, the widely anticipated ” shot in the arm ” for the global economy has yet to materialize.

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Viewpoints

Peak Oil and Runaway China: A Dangerous Combination of Memes

By on 28 Mar 2016 in notable posts, viewpoints with 1 Comment
Peak Oil and Runaway China: A Dangerous Combination of Memes

(CFA Institute) Back in 2005, investors heard an endless chorus in the financial media around two memes: the end of oil, and the growth of China.

Oil production was supposedly hitting its upper limits. In 2005, the US Department of Energy published a study on the peaking of world oil production (.PDF) that stated:

Because oil prices have been relatively high for the past decade, oil companies have conducted extensive exploration over that period, but their results have been disappointing [….] This is but one of a number of trends that suggest the world is fast approaching the inevitable peaking of conventional world oil production [….] The world has never faced a problem like this [….] Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary.

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Oil Price May Have Bottomed Out But China’s Flat Demand Spells Trouble

By on 25 Mar 2016 in notable posts, viewpoints with 0 Comments
Oil Price May Have Bottomed Out But China’s Flat Demand Spells Trouble

(Forbes) As the Brent front-month futures contract stabilizes either side of the $40 per barrel level, and WTI lurks within that range too, a comment by the International Energy Agency that the “oil price may have bottomed out” has triggered a lot of market interest.

In its monthly oil forecast for March, the IEA, which advises on energy policy matters of industrialized nations, noted that non-OPEC oil production would fall by 750,000 barrels per day (bpd) in 2016, compared with its previous estimate of 600,000 bpd. Specifically, US production is forecast to decline by 530,000 bpd this year.

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What Happened to Peak Oil?

By on 18 Mar 2016 in notable posts, viewpoints with 1 Comment
What Happened to Peak Oil?

(greentechmedia.com) Peak oil is the point at which global oil production peaks and can only go down. M. King Hubbert developed the theory of peak oil after observing this pattern in individual oil fields and then extrapolating these trends to the U.S., accurately predicting a peak in U.S. production by 1970.

But in the last few years, as U.S. oil production has dramatically ramped up, many peak oil believers have been left looking a bit silly.

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Other Recent Posts

European oil trader on idle oil tankers in Singapore

By on 23 May 2016 in quotes with 0 Comments

“I’ve been coming to Singapore once a year for the last 15 years, and flying in I have never seen the waters so full of idle tankers,’ said a senior European oil trader a day after arriving in the city-state.”

Keith Wallis and Roslan Khasawneh, for Reuters

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Peak Oil Review – 23 May 2016

By on 23 May 2016 in Peak Oil Review with 0 Comments

Last week began on a bullish tone with oil prices climbing to a seven-month high, Goldman Sachs talking about the end of the oil glut, and columnists predicting a new spike in prices. All this optimism was based on solid Chinese oil imports, strong US gasoline demand, and production outages in Alberta, Nigeria, Libya and Venezuela. As the week moved on, however, the market became less optimistic as US, European, and Asian crude stocks continued to rise, and prices failed to break through the $50 a barrel barrier.

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Head of Russia’s biggest oil firm Rosneft on OPEC

By on 16 May 2016 in quotes with 0 Comments

“At the moment, a number of objective factors exclude the possibility for any cartels to dictate their will to the market. … As for OPEC, it has practically stopped existing as a united organization.”

Igor Sechin, head of Russia’s biggest oil firm Rosneft

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Peak Oil Review – 16 May 2016

By on 16 May 2016 in Peak Oil Review with 0 Comments

Oil prices continued to climb last week with New York futures closing up 3.5 percent, the tenth weekly increase in the past 13 and closing Friday at $46.21. Similarly, London prices were up 5.4 percent to close at $47.83. Forces that move the oil markets keep coming in and out of existence. Hopes that the major exporters would agree to freeze production have now faded, to be replaced by unexpected production outages in several countries as the principal force driving prices higher.

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New Zealand’s Energy and Transport Minister on electric vehicles

By on 9 May 2016 in quotes with 0 Comments

“It’s clear that electric vehicles are the future. A move from petrol and diesel to low-emission transport is a natural evolution, and it is our aim to encourage that switch sooner, rather than later.”

Simon Bridges, New Zealand’s Energy and Transport Minister

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Peak Oil Review – 9 May 2016

By on 9 May 2016 in Peak Oil Review with 0 Comments

Last week saw volatile oil prices and unexpected developments that could have major consequences for the oil industry. The week started on a bearish tone with prices pulling back from weeks of steady increases. As the week wore on several unanticipated oil production outages occurred sending prices higher. At week’s end, however, both US and Brent crude were lower, the first weekly loss after four straight weeks of gains with New York futures at $44.66 a barrel and London at $43.37.

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President and chief economist at Prestige Economics on oil prices

By on 2 May 2016 in quotes with 0 Comments

“Oil prices simply aren’t going to rise fast enough to keep oil and energy companies from defaulting. Then there is a real contagion risk to financial companies and from there to the rest of the economy.”

Jason Schenker, president and chief economist at Prestige Economics

“Put bluntly, the standard claim that the world has proved conventional oil reserves of nearly 1.7 trillion barrels is overstated by about 875 billion barrels. Thus, despite the fall in crude oil prices from a new peak in June 2014, after that of July 2008, the ‘peak oil’ issue remains with us.”

Professor Michael Jefferson of the ESCP Europe Business School, a former chief economist at oil major Royal Dutch/Shell Group, former Deputy Secretary-General of the World Energy Council

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Peak Oil Review – 2 May 2016

By on 2 May 2016 in Peak Oil Review with 0 Comments

Analysts are starting to wonder as whether 2016 could turn out to be similar to 2015 when oil prices rose sharply in the first five months of the year on hopes that the oil surplus would soon be over, and then collapsed in May when it became apparent that there was going to be more oil around than necessary. Last week the price surge which began in February continued throughThursday and then slowed on Friday leaving London futures at $48.13 at the close and New York at $45.92. The impetus for the surge is that that hedge funds and other speculators are convinced that the two-year price slump is over and that higher prices are ahead. This forecast is supported by the steady decline in the US rig count, which continued last week; a continuing drop in US crude production which the EIA projects will continue into next year; a weaker dollar due to the Federal Reserve’s failure to increase interest rates; increased consumption of gasoline in the US due to low prices; market technical analysis showing prices breaking various “ceilings;” and news of a string of production outages across the globe due to insurgencies and unsettled economic conditions.

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Halliburton CEO on an “unsustainable market”

By on 25 Apr 2016 in quotes with 0 Comments

“What we are experiencing today is far beyond headwinds; it is unsustainable. My definition of an unsustainable market is one where all service companies are losing money in North America, which is where we are now.”

Jeff Miller, President of oil services company Halliburton

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Peak Oil Review – 25 April 2016

By on 25 Apr 2016 in Peak Oil Review with 0 Comments

Market sentiment has switched to the opinion that prices are not going much lower, despite warnings from Goldman Sachs and other respected observers that there is no fundamental support for higher prices at this time. Last week various pieces of slightly bullish news that are usually are ignored by the markets were enough to move prices higher for the eighth time in the last ten weeks. Crude now is up 67 percent since February, closing on Friday at $43.73 in New York and $45.11 in London.

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